Brexit and UK Tourism, what is the likely impact?
Just over a month after the result of the EU referendum began to sink in we take a look at how the decision to leave the EU may affect tourism in the UK.
No-one knows for certain what the long term impact on the UK economy of Brexit will be but everyone agrees we are in for a substantial period of change.
The pound has already taken a pummeling on the international exchange markets and today the latest report from the Purchasing Managers Index (PMI) stated that business confidence is at its lowest since late 2009! The PMI is a well-respected indicator of how buoyant the economy is as it is a direct measure of the level and number of orders placed across the business sectors.
The housing market has stalled somewhat since Brexit as well, indicating that there is a high level of consumer concern over the short term economic situation. Commercial property investment in particular has nose-dived since the 22nd of June 2016, again a strong indicator that businesses are nervous about the future.
So what does all of this mean to tourism businesses?
The good news is that UK tourism businesses should do quite well, in the short term at least!
The weak pound makes foreign holidays seem a lot more expensive. This is set to drive more people to holiday at home this summer.
When you add in the additional factors of an increase in the level of terrorist associated attacks in cities like Nice, Paris, Cairo and Instanbul there is a high degree of reluctance to travel to even relatively safe overseas holiday destinations.
The emerging Middle East and Eastern European destinations are more likely than most to suffer in the wake of the ISIS attacks due to the fact that the general public (and insurance companies) are less familiar with these areas. Lack of familiarity will result in a heightened sense of trepidation and therefore reduced numbers of people taking their holidays there.
Turkey and Egypt are already reeling from a massive downturn in bookings for example.
The weak pound will also encourage more tourists from the rest of the world to visit the UK this year also. The UK is well regarded as a safe tourist destination and we should see a further increase in in-bound tourists from Europe and further afield this summer and possibly into next year, if the pound remains weak.
All of this should be good news to the many thousands of beleaguered tourism businesses in the UK as they see bookings increasing. Traditional UK summer holiday destinations like Cornwall and Devon should do particularly well as UK families fall back on nostalgia of previous family holidays.
One thing to be wary of though is the fact that the UK families choosing to holiday in the UK will be very price conscious. The high level of economic uncertainty will mean that families will be watching the pennies whilst on holiday.
Of course, this is always the case but in the next few months, whilst the political and economic climate finds a new norm, the issue will be amplified further.
Plan for the future and not just this summer
Value for money will be crucial this summer so avoid the temptation to “make hay while the sun shines”.
Tourism businesses need to focus on providing good value, highly engaging and enjoyable experiences. Focus on your customer care and look after your customers even more than normal.
We all saw the rapid drop off from “Staycation 1” in 2009-12 when again overseas travel worries coupled with a rebounding economy prompted more people to holiday at home.
Regrettably the “Gove Effect” meant that accommodation prices in particular during school holidays made holidaying in the UK prohibitively expensive for most families, driving them overseas again.
I really hope that tourism businesses learn from this lesson and don’t charge too much this summer otherwise in a couple of years’ time we will all be crying into our beers again as UK families once again head overseas for more value for money summer breaks.
If you need any support with your tourism business please get in touch.
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